Item 1.01 Entry into a Material Definitive
Agreement.
On October 7, 2020, QualityTech,
LP (the “Operating Partnership”), the operating partnership of QTS Realty Trust, Inc. (the “Company”),
and QTS Finance Corporation, a subsidiary of the Operating Partnership initially formed for the purpose of facilitating an offering
of senior notes in 2014 (the “Co-Issuer” and, together with the Operating Partnership, the “Issuers”),
closed an offering of $500 million aggregate principal amount of 3.875% senior notes due 2028 (the “Notes”). The offering
was conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended (the “Securities Act”),
and the Notes have not been registered under the Securities Act or applicable state securities laws and may not be offered or sold
in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and
applicable state securities laws.
On October 7, 2020, in
connection with the offering, the Company, the Issuers and certain of their subsidiaries entered into an indenture (the “Indenture”)
with Deutsche Bank Trust Company Americas, as trustee (“Trustee”), pursuant to which the Issuers issued the Notes at
a price equal to 100% of their face value. Pursuant to the Indenture, the Notes have the following terms, among others:
Interest – Interest
on the Notes will accrue from October 7, 2020, at a rate of 3.875% per annum and be payable semi-annually in arrears in cash on
April 1 and October 1 of each year, beginning April 1, 2021.
Maturity – The Notes
will mature on October 1, 2028.
Guarantees – The
Notes are fully and unconditionally guaranteed on a senior unsecured basis only by the Operating Partnership’s subsidiaries
(other than the Co-Issuer) that currently guarantee the Operating Partnership’s borrowings under its unsecured senior credit
facility (the “unsecured credit facility”). In addition, in the future, any Restricted Subsidiary (as defined below)
of the Operating Partnership (other than a foreign subsidiary or a receivables entity) that guarantees any indebtedness of the
Company, the Issuers or any subsidiary guarantor of the Notes and is not already a guarantor of the Notes will be required to guarantee
the Notes. The Company will not initially guarantee the Notes and will not be required to guarantee the Notes except under certain
circumstances.
Ranking – The Notes
will be (i) the senior unsecured obligations of the Issuers, (ii) pari passu in right of payment with all other existing and future
unsecured senior indebtedness and unsecured senior guarantees of the Issuers, including the Operating Partnership’s indebtedness
under the unsecured credit facility, (iii) senior in right of payment to any future subordinated indebtedness and subordinated
guarantees of the Issuers, if any, (iv) effectively subordinated in right of payment to all existing and future secured indebtedness
and secured guarantees of the Issuers, to the extent of the value of the collateral securing such indebtedness and guarantees,
(v) structurally subordinated in the right of payment to all existing and future indebtedness, guarantees and other liabilities,
including trade payables, and claims of holders of preferred stock, if any, of the Operating Partnership’s subsidiaries (other
than the Co-Issuer) that are not guarantors of the Notes (the “non-guarantor subsidiaries”), and (vi) unconditionally
guaranteed by the guarantors on a senior unsecured basis. Each guarantee of the Notes by a guarantor will be (i) a senior unsecured
obligation of such guarantor, (ii) pari passu in right of payment with all existing and future unsecured senior indebtedness and
unsecured senior guarantees of such guarantor, including, if applicable, such guarantor’s guarantee of the Operating Partnership’s
obligations under the unsecured credit facility, (iii) senior in right of payment to any future subordinated indebtedness and subordinated
guarantees of such guarantor, if any, (iv) effectively subordinated in right of payment to all existing and future secured indebtedness
and secured guarantees of such guarantor, to the extent of the value of the collateral securing such indebtedness and guarantees,
and (v) structurally subordinated to all existing and future indebtedness, guarantees and other liabilities, including trade payables,
and claims of holders of preferred stock, if any, of the non-guarantor subsidiaries.
Optional Redemption –
At any time prior to October 1, 2023, the Issuers may redeem the Notes, in whole or in part, at any time at a redemption price
equal to (i) 100% of the principal amount, plus (ii) accrued and unpaid interest to, but excluding, the redemption date, and (iii)
a make-whole premium. On or after October 1, 2023, the Issuers may redeem the Notes, in whole or in part, at a redemption price
equal to (i) 101.938% of the principal amount from October 1, 2023 to September 30, 2024, (ii) 100.969% of the principal amount
from October 1, 2024 to September 30, 2025, and (iii) 100.000% of the principal amount of the Notes from October 1, 2025 and thereafter,
in each case plus accrued and unpaid interest to, but excluding, the redemption date. In addition, at any time prior to October
1, 2023, the Issuers may, subject to certain conditions, redeem up to 40% of the aggregate principal amount of the Notes at 103.875%
of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the redemption date, with the net cash proceeds
of certain equity offerings consummated by the Company or the Operating Partnership.
Repurchase Obligations
– If a Change of Control Triggering Event (as defined in the Indenture) occurs, holders of the Notes may require the Issuers
to repurchase all or part of their Notes at a price of 101% of the principal amount thereof, plus accrued and unpaid interest to,
but excluding, the repurchase date. In addition, in certain circumstances the Issuers may be required to use the net proceeds of
asset sales to purchase a portion of the Notes at 100% of the principal amount thereof, plus accrued and unpaid interest to, but
excluding, the repurchase date.
Covenants – The
Indenture contains covenants that, among other things, limit the Operating Partnership’s ability and the ability of certain
of its subsidiaries (its “Restricted Subsidiaries”) (i) to incur secured or unsecured indebtedness, (ii) to pay dividends
or distributions on its equity interests, or redeem or repurchase equity interests, (iii) to make certain investments or other
restricted payments, (iv) to enter into transactions with affiliates, (v) to enter into agreements limiting the ability of the
Operating Partnership’s Restricted Subsidiaries to pay dividends or make certain transfers and other payments to the Operating
Partnership or to other Restricted Subsidiaries, (vi) to sell assets and (vii) to merge, consolidate or transfer all or substantially
all of their assets. The Operating Partnership and its Restricted Subsidiaries also are required to maintain total unencumbered
assets (as defined in the Indenture) of at least 150% of their unsecured indebtedness on a consolidated basis. These covenants
and definitions contain important exceptions, limitations and qualifications set forth in the Indenture. If and for so long as
the Notes are rated investment grade by at least two of Moody’s Investors Service, Inc., S&P Global Ratings, a division
of S&P Global, and Fitch Ratings Inc., certain covenants will be suspended with respect to the Notes and the guarantees will
be suspended.
Events of Default –
The Indenture also contains customary events of default including, but not limited to, nonpayment, breach of covenants, and payment
or acceleration defaults in certain other indebtedness of the Company or certain of its subsidiaries. Upon an event of default,
either the holders of at least 25% in aggregate principal amount of the Notes or the Trustee may declare the Notes immediately
due and payable, or in certain circumstances, the Notes automatically will become due and immediately payable.
A copy of the Indenture
is attached to this Current Report on Form 8-K as Exhibit 4.1 and incorporated herein by reference. The summary set forth above
is qualified in its entirety by reference to Exhibit 4.1.